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MANILA, Philippines – Philippine stocks soared Thursday, September 19, along with emerging markets, following a surprise decision by the US Federal Reserve to keep its massive stimulus program intact.
The Fed’s announcement to hold off winding down its $85-billion-a-month bond-buying fueled a buying spree on Wall Street, sending the Dow and S&P 500 to record highs.
Asia took up the baton Thursday, with under-pressure developing economies breathing a sigh of relief after suffering a heavy sell-off in August as investors bet on the Fed tightening its monetary policy.
The Philippine Stock Exchange index jumped 177.84 points or 2.81% to 6,511.70.
The broader all-share index went up 91.34 points or 2.38% to 3,924.67.
All counters ended in green, with the property sector posting the biggest gain of 4.65%.
A total of 1.78 billion shares worth P15.97 billion were traded.
In an eagerly awaited announcement, the Fed said it would keep the stimulus in place as it wanted to further gauge the economic impact of US public spending cuts and a spike in interest rates in the past 4 months.
Instead, it cut its growth forecast for the US economy this year and next as chairman Ben Bernanke warned of possibly “very serious consequences” from a brewing political battle in Washington over a new budget and the US debt ceiling.
“The Federal Reserve’s policy is to do whatever we can to keep the economy on course. And so if these actions led the economy to slow, then we would have to take that into account, surely,” he told reporters.
He said the bank could still start reducing the bond-buying, which aims to hold down long-term interest rates, in the next 3 months, but only if the economic outlook improves.
“There is no fixed calendar,” he said.
Wall Street welcomed the announcement. The Dow rose 0.95%, the S&P 500 climbed 1.22% and the Nasdaq was up 1.01%.
Emerging economies have suffered a huge outflow of cash – sending stock and currencies tumbling – since Bernanke in May hinted the Fed would begin tapering its bond-buying scheme, which had led to an investment splurge from foreigners looking for higher returns than in the US. – Rappler.com, with Agence France-Presse
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